MUMBAI: With investigations into
ICICI Bank CEO Chanda Kochhar’s alleged conflict of interest continuing, at least one board member is of the view that the focus should be on asserting the strength of the institution rather than defending allegations against an individual. This could lead to a proposal for an interim CEO, with Kochhar temporarily stepping down until the investigations are over, news agency Bloomberg reported on Monday.
The bank, which is predominantly owned by foreign institutional investors, is facing queries with respect to various media reports. Earlier in the day, ICICI Bank had denied reports that some directors want Kochhar to step down temporarily.
On March 28, the ICICI Bank board had issued a strong statement in favour of the CEO, saying it had reviewed credit processes and found them robust. However, soon after the board meet, CBI sources said it had registered a preliminary enquiry against Deepak Kochhar,
Videocon group officials and others to verify if there was any illegality in the sanctioning of a Rs 3,250-crore loan to the Videocon Group.
Of the 12-member ICICI board, half are executive directors or bank employees. The six non-executive directors include bank chairman MK Sharma, LIC chairman VK Sharma, Lok Ranjan from the finance ministry, chartered accountant Uday Chitale, economist and public policy specialist Tushaar Shah, chartered accountant Dileep Choksi, and Neelam Dhawan, a professional who has held key management positions in tech companies.
Meanwhile, equity analysts have pointed out that there are many unresolved issues and questions that the bank will have to address soon. “With investigative agencies entering the picture, the loan disbursement process in the bank can also be called in question. Hence, till further clarity emerges, the aforementioned development will be an overhang for the stock,” said a stock update from Sharekhan.
In addition to the conflict of interest allegations, ICICI Bank has been under fire from the RBI for not following rules while selling government bonds. Last month, RBI had fined the bank Rs 59 crore for treasury violations. “We see pressure in the short term following the fine, allegations and CBI's preliminary enquiry. Fourth quarter earnings will likely be weak with slippage of Rs 13,000 crore, and a core pre-tax loss in our view,” said Mahrukh Adjania of IDFC Securities.
